Car industry welcomes UK review of electric car targets; stock market investors hope for Santa rally – business live

Jonathan Webster-Smith, chief investment officer at Bowmore Asset Management, makes an important point about the Santa rally concept:

“Every year investors hope for a Santa rally – but they should be careful about trading on the back of it.”

“The years in which this occurs are a bit too random”.

Helpfully, Webster-Smith, has also pulled together some stats to back up the idea that stock markets tend to rise at this time of year.

• The FTSE 100 has risen in three of the past five years (2019-2023, inclusive) for the ten-day period leading up to New Year

• Since its creation in 1896, the Dow Jones index has historically risen in 77% of years for the period between December 26 and January 2 – averaging +1.5%

• The ‘Santa rally’ rise has occurred in 75% of the years since 1950 for the Dow Jones, according to one study

• US stock market has averaged +1.3% over the last 70 years for the period between December 24 and December 31 according to another study

• These gains significantly outperform the average six day return throughout the rest of the year – averaging just +0.2%

But why?

Well, there’s a few likely causes – from improved sentiment over the Christmas break (unless you’re working, perhaps…), money flowing into the market from bonuses at the end of the year, and the publication of lists of shares which may do well in the new year.

It’s been quite a busy year for takeovers in the City, and the drama isn’t over yet.

Maritime analytics firm Windward has agreed to be snapped up by an investment fund in a £216m deal announced this morning.

The company, which is chaired by former BP boss Lord John Browne, is to be bought by Octopus UK Bidco, a subsidiary of an FTV Capital investment fund.

The deal will see the FTV fund pay 215p per Windward share, a 47% premium on its previous closing price.

Shares in Windward have jumped 42% to 207p, their highest since January 2022, shortly after it floated on the stock market.

Lord Browne says:

“Windward has become firmly established on the world stage, but as an organisation we recognise there remains an untapped opportunity ahead to further transform additional spheres of global trade.

Following due consideration, the Windward Independent Directors believe this transaction is in the best interests of all stakeholders, including our shareholders and employees; providing the environment to facilitate this expansion and support the future growth of the company.”

The UK auto industry is welcoming the government’s decision to launch a consultation into how to phase out new petrol and diesel cars by 2030.

Transport Secretary Heidi Alexander has launched the consultation this morning, asking automotive and charging experts to give their views on how to end the sale of internal combustion engine-powered vehicles by the end of the decade.

In this year’s election campaign, Labour pledged to restore the 2030 phase-out date for new purely petrol and diesel cars, after the previous UK government extended the phase out to 2035.

Under the UK’s current targets, carmakers must ensure that a certain percentage of their sales are zero emission vehicles, or face financial penalties.

The new consultation will run for eight weeks, and will be “focused on how, not if, we reach the 2030 target”, the Department for Transport says. It is in two parts – the first will look at whether hybrids, and plug-in hybrids should count towards the EV targets, and the second will consider technical changes to the mandate.

Mike Hawes, chief executive of industry body the SMMT, says it is “imperative” the government resolves the uncertainty around the move to electric cars:

“The automotive industry welcomes government’s review of both the end of sale date for cars powered solely by petrol or diesel, and possible changes to the flexibilities around the Zero Emission Vehicle Mandate. These are both critical issues for an industry that is facing significant challenges globally as it tries to decarbonise ahead of natural market demand.

Aside from the billions invested in new technologies and products, it has cost manufacturers in excess of £4 billion in discounting in the UK this year alone. This is unsustainable and, with the 2025 market looking under even greater pressure, it is imperative we get an urgent resolution, with a clear intent to adapt the regulation to support delivery, backed by bold incentives to stimulate demand.

Such action will support not only the industry, but also deliver for the economy, consumer, government and the environment.”

Matthew Adams, head of transport at the Association for Renewable Energy and Clean Technology, says the consultion should help speed up the rollout of electric car infrastructure:

“Today is welcome news that the Government will look to restore the end of sale of internal combustion engines to 2030. For the EV infrastructure sector this will help provide investor certainty and allow us to deploy charging infrastructure further and quicker than ever before. Decarbonising road transport is crucial to hitting net zero and this consultation is the best next step in getting us there.”

Edmund King, AA president, says new clarity on the UK’s plans will help consumers move to EVs:

“The AA supported the original zero emission new cars sales deadline of 2030 as ‘challenging but ambitious’ and the results of this consultation should define the firm route to zero emissions.

Understandably drivers have been ‘hesitant not hostile’ about the transition but more clarity on hybrids, vans and planning support for accelerated charging infrastructure should give them more certainty. Climate change is a critical global challenge and decarbonising transport is essential.”

Housebuilder Vistry is firmly on the City’s naughty list, after reporting its third profit warning of the year (see earlier post).

Shares in Vistry have plunged by almost 20% at the start of trading, making it the worst performer on the FTSE 250 index of medium-sized companies.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, says:

Vistry’s festive season is anything but merry, with profit guidance sliding down the chimney once again, this time from £300m to c.£250m, as delays to year-end transactions failed to make it onto the nice list.

This marks the group’s third profit downgrade of the year, a troubling trend driven by a string of poor management decisions and forecasting missteps that have left investors feeling far from jolly. Even a late cash influx in December couldn’t light up the season, with net debt now expected to close the year at around £200m – a far cry from the neutral footing investors had hoped for.

As the year ends on a sour note, Vistry faces a long winter of rebuilding trust, leaving investors with little choice but to mull over their options.

British housebuilder Vistry has issued its third profit warning in three months, resulting in a year-end blow to the construction company.

The business, which was relegated from the FTSE 100 share index on Monday, now expects annual adjusted pre-tax profit of just £250m, down from previous guidance of around £300m.

The group – once known as Bovis Homes – said this is partly due to delays, with a number of developments having not yet been completed, and transactions with partners having been kicked down the road to 2025.

Vistry also said that it had also ditched a number of proposed deals “where the commercial terms on offer were not sufficiently attractive.” It is expecting that better terms and options will open up next year.

But this is the third profit warning from Vistry in as many months.

In October, Vistry launched an independent review of operations in its south division after revealing it had “understated” total build costs by about 10%. It estimated at the time that this would knock profits by £115m over the next two years, and ultimately cut annual profit for 2024 to £350m, well below the £419m last year. The news sent its shares plummeting, wiping £1bn off the company’s value.

A month later, in November, Vestry said it expected a bigger hit to profit of around £165m, and downgraded its 2024 profit expectations to £300m.

Commenting on the third profit warning on Tuesday, chairman and chief executive Greg Fitzgerald said it had been a “challenging past few months”:

“Today’s announcement and the financial outcome for FY24 is disappointing. Our top priority for 2025 is to continue building and delivering high quality mixed tenure new homes for our partners and private customers, and to do our part in addressing the country’s acute housing shortage.

We remain committed to our partnership housing strategy and are firmly focused on positioning the business to move forwards and rebuild profitability.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

It’s the final trading day in global stock markets before Christmas, and traders will be hoping for a visit from Santa.

The Santa Rally is a stock market phenomenon where shares on developed markets tend to rise around the Christmas period. And there are signs today that it’s arrived – late.

Stocks are rallying across the Asia-Pacific region, where China’s CSI 300 index has gained 1.27% today, and Hong Kong’s Hang Seng is up 1%. Australia’s S&P/ASX 200 has nudged up by 0.25% and South Korea’s KOSPI index has risen by a more modest 0.13%

That follows gains on Wall Street last night, where the S&P 500 rose by 0.7%.

This sets the UK market up for gains in a shortened Christmas Eve session today; FTSE futures are up 0.6%, which would lift the London market away from last week’s one-month low.

Market sentiment has been rattled in recent weeks by concerns that central banks may not lower interest rates as swiftly as expected in 2025. Investors now expect just two US interest rate cuts next year, and two in the UK as well.

Global growth is also expected to slow next year, while the return of Donald Trump to the White House raises the risk of fresh tariffs on global trade. Trump’s election win sparked a rally in November, so perhaps Santa just came early this year.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, sets the scene:

It’s never too late to believe in Santa.

Investors on Monday were shrugging off the bad news of past week – especially the one that suggested that the Federal Reserve (Fed) would cut its rates only two times in 2025 due to a too resilient US economy. Yesterday’s data that showed that the US durable goods orders fell more than expected in November, the new home sales rebounded slightly less than expected and the consumer confidence unexpectedly dropped in December.

This bag of bad news helped tempering the latest hawkish shift in Fed expectations. As such, the buyers are out and buying. The S&P500 rebounded 0.73%, Nasdaq 100 rallied more than 1% and even the European Stoxx 600 eked out a small gain, as Novo Nordisk in Denmark jumped more than 5.5% as investors rushed in to buy a dip on bet that the weight loss drugs are here to stay.

The agenda

• 12.30pm GMT: UK stock market to close early for Christmas

• 1.55pm GMT: US Redbook index of US retail sales

• 3pm GMT: Richmond Federal Reserve